Question 1

The nominal interest rate equals:

Accepted Answer

A) ​the real interest rate minus the inflation rate. 
B) ​the inflation rate minus the real interest rate. 
C) ​the real interest rate plus the inflation rate. 
D) ​none of the above. 
A) ​the real interest rate minus the inflation rate. 
B) ​the inflation rate minus the real interest rate. 
C) ​the real interest rate plus the inflation rate. 
D) ​none of the above.

Question 2

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

Accepted Answer

A) ​It would increase. 
B) ​It would fall. 
C) ​It would change, but the effect cannot be predicted. 
D) ​It would not change. 
A) ​It would increase. 
B) ​It would fall. 
C) ​It would change, but the effect cannot be predicted. 
D) ​It would not change.

Question 3

Cyclical unemployment rises and falls with fluctuations in the macroeconomy.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is false?

Accepted Answer

A) ​The unemployment rate is the number of people officially unemployed divided by the civilian labor force. 
B) ​The labor force includes those people over the age of 14 who are either employed or unemployed. 
C) ​Discouraged workers, who have not actively sought work for four weeks are not counted as unemployed; instead they fall out of the labor force. 
D) ​Some people working overtime or extra jobs might be considered to be overemployed. 
A) ​The unemployment rate is the number of people officially unemployed divided by the civilian labor force. 
B) ​The labor force includes those people over the age of 14 who are either employed or unemployed. 
C) ​Discouraged workers, who have not actively sought work for four weeks are not counted as unemployed; instead they fall out of the labor force. 
D) ​Some people working overtime or extra jobs might be considered to be overemployed.

Question 5

Unexpected inflation harms both debtors and individuals who live on fixed incomes.

Accepted Answer

A) True 
 B)False

Question 6

​Exhibit 10-1  
-Refer to Exhibit 10-1. The number of people considered to be out of the labor force is:

Accepted Answer

A) ​100 million. 
B) ​60 million. 
C) ​85 million. 
D) ​180 million. 
A) ​100 million. 
B) ​60 million. 
C) ​85 million. 
D) ​180 million.

Question 7

The economy reaches full employment when the unemployment rate equals zero.

Accepted Answer

A) True 
 B)False

Question 8

The Natural rate of unemployment equals

Accepted Answer

A) ​The sum of the frictional and structural unemployment rates. 
B) ​The sum of the frictional and cyclical unemployment rates. 
C) ​The sum of the structural and cyclical unemployment rates. 
D) ​None of the above. 
A) ​The sum of the frictional and structural unemployment rates. 
B) ​The sum of the frictional and cyclical unemployment rates. 
C) ​The sum of the structural and cyclical unemployment rates. 
D) ​None of the above.

Question 9

Which of the following groups are typically harmed by unexpected inflation?

Accepted Answer

A) ​lenders 
B) ​borrowers 
C) ​pensioners on fixed incomes 
D) ​both (a) and (c). 
A) ​lenders 
B) ​borrowers 
C) ​pensioners on fixed incomes 
D) ​both (a) and (c).

Question 10

In November 1995 the labor force in Aberdeen, South Dakota, was 14,800. There were 14,483 persons employed. The local unemployment rate:

Accepted Answer

A) ​was 1.2 percent. 
B) ​was 2.1 percent. 
C) ​was 5.6 percent. 
D) ​was 7.1 percent. 
A) ​was 1.2 percent. 
B) ​was 2.1 percent. 
C) ​was 5.6 percent. 
D) ​was 7.1 percent.

Question 11

Persons who do not hold a job and are not actively seeking work are considered:

Accepted Answer

A) ​out of the labor force. 
B) ​unemployable, and not counted in official statistics. 
C) ​underemployed. 
D) ​unemployed. 
A) ​out of the labor force. 
B) ​unemployable, and not counted in official statistics. 
C) ​underemployed. 
D) ​unemployed.

Question 12

If the nominal rate of interest is 10.5 percent, and the inflation rate is 4.3 percent, what is the real rate of interest?

Accepted Answer

A) ​3.0 percent 
B) ​4.3 percent 
C) ​6.2 percent 
D) 10.5 percent 
A) ​3.0 percent 
B) ​4.3 percent 
C) ​6.2 percent 
D) 10.5 percent

Question 13

The CPI measures the average level of prices of all final goods and services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is correct?

Accepted Answer

A) ​Technological advances always lead to the permanent displacement of workers. 
B) ​In a growing and dynamic economy, jobs are constantly being destroyed and created. 
C) ​Without unemployment insurance, the average duration of unemployment would likely be longer. 
D) ​If there is a balance between demand and supply in the labor market, frictional employment must equal zero. 
A) ​Technological advances always lead to the permanent displacement of workers. 
B) ​In a growing and dynamic economy, jobs are constantly being destroyed and created. 
C) ​Without unemployment insurance, the average duration of unemployment would likely be longer. 
D) ​If there is a balance between demand and supply in the labor market, frictional employment must equal zero.

Question 15

Each person in the population can be classified as employed, unemployed, or not in the labor force.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following biases the CPI to underestimate increases in prices?

Accepted Answer

A) ​The substitution bias 
B) ​The quality bias 
C) ​The new outlet bias 
D) ​None of the above 
A) ​The substitution bias 
B) ​The quality bias 
C) ​The new outlet bias 
D) ​None of the above

Question 17

A discouraged worker is someone who:

Accepted Answer

A) ​has a job, but wants to get a different one. 
B) ​is unemployed and looking for work. 
C) ​quits a job and is unable to collect unemployment compensation. 
D) ​gives up looking for work, and is no longer counted as unemployed. 
A) ​has a job, but wants to get a different one. 
B) ​is unemployed and looking for work. 
C) ​quits a job and is unable to collect unemployment compensation. 
D) ​gives up looking for work, and is no longer counted as unemployed.

Question 18

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

Accepted Answer

A) ​frictionally unemployed. 
B) ​underemployed. 
C) ​cyclically unemployed. 
D) ​structurally unemployed. 
A) ​frictionally unemployed. 
B) ​underemployed. 
C) ​cyclically unemployed. 
D) ​structurally unemployed.

Question 19

Which of the following does not lead to the CPI underestimating increases in prices?

Accepted Answer

A) ​The substitution bias 
B) ​The quality bias 
C) ​The new outlet bias 
D) ​The housing bias 
A) ​The substitution bias 
B) ​The quality bias 
C) ​The new outlet bias 
D) ​The housing bias

Question 20

In recent years there has been ____ in men's labor force participation rate and ____ in women's labor force participation rate.

Accepted Answer

A) ​an increase; an increase 
B) ​an increase; a decrease 
C) ​a decrease; an increase 
D) ​A decrease; a decrease 
A) ​an increase; an increase 
B) ​an increase; a decrease 
C) ​a decrease; an increase 
D) ​A decrease; a decrease

Exam 10: Consumer Choice Theory

The nominal interest rate equals:

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

Cyclical unemployment rises and falls with fluctuations in the macroeconomy.

Which of the following is false?

Unexpected inflation harms both debtors and individuals who live on fixed incomes.

​Exhibit 10-1 -Refer to Exhibit 10-1. The number of people considered to be out of the labor force is:

The economy reaches full employment when the unemployment rate equals zero.

The Natural rate of unemployment equals

Which of the following groups are typically harmed by unexpected inflation?

In November 1995 the labor force in Aberdeen, South Dakota, was 14,800. There were 14,483 persons employed. The local unemployment rate:

Persons who do not hold a job and are not actively seeking work are considered:

If the nominal rate of interest is 10.5 percent, and the inflation rate is 4.3 percent, what is the real rate of interest?

The CPI measures the average level of prices of all final goods and services produced in the economy.

Which of the following statements is correct?

Each person in the population can be classified as employed, unemployed, or not in the labor force.

Which of the following biases the CPI to underestimate increases in prices?

A discouraged worker is someone who:

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

Which of the following does not lead to the CPI underestimating increases in prices?

In recent years there has been ____ in men's labor force participation rate and ____ in women's labor force participation rate.

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exhibit 10-1 -Refer to Exhibit 10-1. The number of people considered to be out of the labor force is:

In recent years there has been in men's labor force participation rate and in women's labor force participation rate.